The UK government has confirmed the allocation of funding worth up to £2b ($2.6b) over 15 years to 11 green hydrogen projects with a total capacity of 125MW.

The projects were selected by the previous Conservative government to receive funding via the country’s inaugural subsidy allocation round. However, the status of the support had been uncertain after the Labour party took power following a general election in July.

“Today, I am providing funding for 11 new green hydrogen projects across England, Scotland and Wales. They will be among the first commercial-scale projects anywhere in the world,” said Chancellor Rachel Reeves in a budget speech to parliament.

The subsidies will be paid out via contracts for difference (CfDs), which guarantee a strike price, giving developers revenue certainty over the lifetime of a project—a key benefit for those seeking private finance.

The projects were contracted at a weighted average strike price of £241/MWh—placing green hydrogen at the upper end of renewables CfDs in the UK—as the government has linked contracts to natural gas prices.

The government plans further allocation rounds in 2025 and 2026 with the ambition to raise contracted capacity to 1.5GW. The UK’s hydrogen strategy has from the outset called for the development of both green and CCS-enabled blue production routes. It aims to support the development of 6GW of green hydrogen and 4GW of blue hydrogen by 2030, according to plans set out by the previous government.

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Author: Stuart Penson